FBR Reiterates Upbeat View on FuelCell Energy Inc (FCEL) Despite Weak 2Q Results

FuelCell Energy Inc (NASDAQ:FCEL) posted weak third-quarter results on Wednesday, with revenue of $21.7 million that missed the mark. Still, FBR analyst Carter Driscoll believes the fuel-cell maker’s underperformance in its third-quarter does not overshadow major catalysts looming in the upcoming fourth-quarter, and dismisses the revenue miss as more of a reflection of a “timing issue.”

As such, the analyst remains bullish, reiterating an Outperform rating on FCEL with a price target of $9.00, which represents a 72% increase from where the shares last closed.

Driscoll adds that FCEL management clearly anticipates a far improved fourth-quarter based on its maintained guidance of $140 million to $170 million for the fiscal year of 2017, which would indicate the expectation of a robust fourth-quarter to bring in $56 million to $86 million in revenue.

“This F4Q guidance largely leaves aside the 125 MW in pending renewable awards, which we believe should be the next catalyst, along with site selection for the DOE carbon capture project. While some investors might be frustrated the renewable awards have not yet materialized, we remain convinced it’s a timing issue and FCEL remains well-positioned to capture the 63.3 MW Beacon Falls project (superior economic profile), some of Connecticut’s DEEP 2–20 MW RFP (using a new competitive product), and PSEG’s Long Island–based 40 MW fuel cell RFP (lower costs than competitors),” he concludes.

With slew of PPA-based projects waiting to be monetized in the upcoming quarter coupled with a likely improved margin profile, Driscoll believes he has every reason to expect a strong fourth-quarter recovery.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Carter Driscoll is ranked #4,014 out of 4,147 analysts. Driscoll has a 21% success rate and faces a loss of 18.5% in his yearly returns. When recommending FCEL, Driscoll loses 10.6% in average profits on the stock.

TipRanks analytics demonstrate FCEL as a Strong Buy. 100% of analysts polled in the last 3 months rate a Buy on FCEL. The consensus price target stands at $10.50, marking a 98% upside from where the stock is currently trading.

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